Falling jobless claims signal expanding economy

Out a day early due to tomorrow’s Veteran’s Day holiday, weekly initial jobless claims fell a steep 24,000 in the latest week to 435,000, the second week in three that claims have fallen below the stagnant range they’ve been in for over year and below the Bloomberg estimate of 450,000.

The 4-week moving average dropped an impressive 10,000 to 446,000.



Continuing claims, which have been more difficult to interpret in this cycle because many are filing for emergency extensions that aren’t included in the figure, remain in a downward trend, dipping 86,000 to 4.3 million.

The 4.3 million does not include those on extended benefits. But the downward trend in the six-month standard payment does suggest that laid off workers, though still facing an uphill climb, may slowly be reaping the benefits of an improving economy.

Weekly claims remain elevated and obstacles are still in the path that might lead to a more vibrant expansion.  But activity does appear to be shifting into a higher gear, albeit slowly, and that should assist with job creation and put the economy on a firmer footing.

With the exception of a statistical quirk that caused claims to hit 428,000 in July, jobless claims are now at the lowest level in over two years and remain in the narrow downward trend that began in August when claims hit a weekly peak of 504,000.

Next week’s data may be skewed by tomorrow’s federal holiday, but the receding level of layoffs, combined with cautiously upbeat signals from most indicators, suggest employers are growing more confident.

With the election behind us and the unveiling of the Fed’s shift in monetary policy, both which are alleviating some of the uncertainty that’s been hampering growth, I am cautiously optimistic that we may finally be seeing the start of a long-awaited acceleration in economic activity.